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NBG increases monetary policy rate

By Tatia Megeneishvili
Friday, August 14
National Bank of Georgia (NBG) increased the monetary policy rate (refinancing rate) by 0.50 basis points to 6%.

This decision was made in the NBG Monetary Policy Committee (MPC) meeting on August 12, 2015.

The NGB President Giorgi Kadagidze said that due to the fact that businessmen are waiting for the GEL inflation, companies are making reserves in dollar and this fact is additional pressure on the exchange rate of the GEL.

The statement released by the NBG reads that the monetary policy decision is based on the macroeconomic forecast, which indicates increase in the inflation expectations as well as in the domestic and external risks affecting the forecast inflation.

“The aggregate demand is still weak due to the negative economic developments in our main trading partners. Domestically, a factor worth mentioning is the attempt to discredit the policy of the National Bank, which pushes up long term interest rates, weakens the monetary policy transmission efficiency and drives up inflation expectations.

“In line with the existing forecast the MPC considers appropriate to continue normalization of the monetary policy. Unless additional shocks occur, the monetary policy rate by the end of the year will be within 6.5 percent. The rate of further changes in the monetary policy will depend on the inflation forecast,” reads the statement.

The next meeting of the MPC will be held on September 23, 2015.